Posting results for its second quarter of fiscal 2018 that were mostly in line with analysts’ expectations, Wal-Mart Stores Inc. still managed to more than hold its own in the highly competitive ecommerce arena, proving that its considerable recent technology investments are working to its advantage.
For Q2, Walmart reported total revenue of $123.4 billion, an increase of $2.5 billion, or 2.1 percent. Excluding currency, total revenue came to $124.4 billion, an increase of $3.5 billion, or 2.9 percent.
Walmart U.S. comparable-store sales edged up 1.8 percent, with traffic growth of 1.3 percent, marking the division’s twelfth straight quarter of positive comps. Ecommerce at Walmart U.S. continued its strong growth, driven by organic growth through Walmart.com. Net sales and gross merchandise value rose 60 percent and 67 percent, respectively, as shoppers embraced new initiatives such as free two-day shipping, automated pickup towers, Walmart.com’s Easy Reorder feature, and an expanded online assortment of 67 million-plus SKUs.
Strongest Grocery in 5 Years
The company’s U.S. grocery business continued to improve, with food categories delivering their strongest quarterly comps in five years, driven by solid customer traffic and the return of slight market food inflation, excluding the company’s own price investments, noted EVP and CFO Brett Biggs during Walmart’s Aug. 17 quarterly earnings call.
Net sales at Walmart International, however, declined 1 percent to $28.3 billion. Excluding currency, net sales were $29.3 billion, a 2.5 percent increase. Nine out of 11 of the Bentonville, Ark.-based mega-retailer’s markets posted positive comps. Walmex remained the strongest international performer, with comps growth of more than 7 percent in the quarter.
The Sam’s Club warehouse club division saw comp traffic growth of more than 2 percent, while comps without fuel rose 1.2 percent in the quarter and e-commerce GMV increased 23 percent.
“Thanks to the team for delivering another solid quarter,” said Walmart President and CEO Doug McMillon. “Our customers are responding to the improvements in stores and online, and our results reflect this. Traffic increases at store level and the ecommerce growth rate are key highlights. We are moving faster and becoming more creative as we strive to make every day easier for busy families.”
Online Grocery Expanding
Discussing Walmart’s ecommerce initiatives during the earnings call, McMillon noted, “We have tests going on with digital endless-aisle shopping, robotics and image analytics to scan aisles for outs, and we’re using machine learning to assist our merchants with pricing.”
He added: “We’ve seen strong results from the rollout of online grocery, which is now in more than 900 U.S. locations, and we’re expanding this service in many of our markets around the world. Retail is constantly evolving, and it’s critical that we move even faster as the customer and competitive landscape continue to change.”
McMillon concluded his remarks during the call by saying that the company was “encouraged with the solid first-half results [and] uniquely positioned to deliver the seamless, fast, innovative and exciting shopping experience our customers desire.”
Despite its generally satisfactory Q2 results, however, Walmart lowered its annual profit guidance to $4.30 to $4.40 earnings per share, in an acknowledgement that it was forgoing margins for grocery market share.